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TMI Blog2015 (10) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... 961. (2) That the ld. Commissioner of Income-tax (Appeals) has erred in law and on the facts in applying GP rate of 20.00% as against 19.20% declared by the assessee and thereby confirming an addition of Rs. 2,09,854/-. 2. Ground no. 1 for rejection of books of account under section 145(3) is not pressed by the assessee. Therefore, the same is dismissed as not pressed. 3. Ground No. 1.1 is against confirming the addition by applying GP rate at 20% as against 19.20% declared by the assessee and confirming the addition of Rs. 2,09,854/- by ld. CIT (A). The assessee is in the business of manufacturing and trading of gold and semi-precious jewellery. Return of income was filed by the assessee on 30.09.2008 at NIL income. The case was scrutin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed the appeal partially by observing as under :- " 4.3. I have carefully perused the order of the AO and the submissions of the AR. There are four factors to determine the correct profit of any assessee, the authenticity of the purchases and sales and verifiability of the closing and opening stock. In this particular case, the AO has given a categorical finding that the items or their value in the closing stock could not be verified and on the basis of this information he has rejected the books of accounts of the assessee by invoking the provisions of section 145(3) of the I. T. Act. The AR while giving the detailed justification for not maintaining the stock register has not rebutted this finding of the AO regarding non verifiability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's business. (b) The product the assessee is dealing in is a fashion product which is susceptible to change very fast. Thus to conduct the business with expectations of earning more and more margins may lead the consumers away from the assessee. (c) The product which the assessee deals in is of competitive in nature and the consumers have options of looking at numerous show rooms in the Jaipur City. (d) It may be appreciated that the thrust of the management has been on growth in turnover. To maintain customer loyalty, enter into competitive market the thrust cannot be on the GP%. However as submitted due to amount incurred on brand creation, marketing, advertisement, sponsorships the assessee had to incur net loss. (e) Another importan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iffers on size to size and accordingly valuation of diamond jewellery varies from item to item. As argued by the ld. A/R that number of decisions are quoted by him particularly of Hon'ble Rajasthan High Court decision in case of Malani Ramjivan Jagannath vs. ACIT (207 CTR 19) and ITAT Jaipur Bench decision on fall in GP and non-maintenance of stock register support the assessee's case. Therefore, we reverse the order of ld. CIT (A). It is not necessary that where books were rejected certain addition is required to be made to the income of the assessee as held by Hon'ble Rajasthan High Court in case of Gotton Lime Khaniz Udyog, 256 ITR 243 (Raj.). Therefore, we allow the assessee's appeal. 7. In the result, the assessee's appeal is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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